NEW DELHI: In a move that has implications for India’s basmati exports to the European Union, the trade bloc has started the process of negotiating a new rice import regime by notifying a request to this effect at the WTO.
Exports of brown basmati to the EU have enjoyed zero duty for the last six years due to a tariff concession of 250 euros a tonne, which runs the risk of being withdrawn in any new rice import regime, industry and government officials said here.
“EU intends to renegotiate its commitments for market access to rice under Article 28 of the WTO. The idea is to continue domestic protection and reduce import,” director, United Riceland Company, RS Seshadri, said here.
Joint commerce secretary R Gopalan said the request for negotiation has to be accepted and both industry and government will now have to sit together and chalk out a strategy to deal with the situation.
Brigadier Adlakha of All India Rice Exporters Association said it is too early to form a response to the new development and the latest EU move seems to have been the result of increasing domestic rice production due to which the region feels imports need to be controlled.
Further he said the US is keen to push its own rice exports to the EU which have fallen in proportion to the rise in India’s brown basmati exports to the region.
Experts however say the negotiation mandate given by the European Council suggests that there should be favourable treatment of the developing countries and creation of a new tariff line for rice.
Experts felt the creation of a new tariff line will address the issue of basmati which has so far enjoyed the tariff concession.
They said India is expected to lead the negotiation under Article 28 of WTO since it holds the principal supply interest position in basmati for EU. Agriculture ministry officials said certain Indian exporters are interested in breaking the EU concession in traditional basmati to keep their niche in the market, which will have to be discouraged. They said if need be India should push for tariff concession in milled basmati instead of brown basmati for higher income to the farmers.
Mr Seshadari said the current situation has arisen as there has been an over 20% increase in yields of Indica rice in the EU in the last few years and there has been a major increase in production as well.
This is because of large domestic support provided to the producers of rice where the paddy cost of cultivation is a massive $360 a tonne against the $190 a tonne price at which India can pack, transport and deliver rice.
With such support, it is not surprising that average land holding for paddy in all the EU member countries except Greece is increasing in size and in France, 85 hectares is the largest land holding for paddy.
Worse still, under its “Everything but arms” proposals, EU intends to provide duty free unlimited access to imports from countries like Nepal, Bangladesh, Kenya and Uganda but not India, by ‘09. It will also increase the tariff rate quotas of the least developing countries, he added.